Liquidity—the growing scarcity of it right now—is something that has bothered us for a while. It’s getting harder to turn an asset into cash. Higher liquidity implies the ability to sell quickly at a price similar to recent pricing. One way of thinking about liquidity is to consider the difference in the liquidity of a house (not very liquid) versus publicly-traded equity (typically very liquid). You can often measure in months, or even years, the time from the moment of the first action to sell a house to the point where the proceeds of the sale are in your bank account, and those proceeds might be quite different from your initial fair price assumption. For publicly-traded equity, on the other hand, the time is counted in seconds between taking action to sell and the sale itself, and the sale price will typically be only pennies different than the last quoted price. Hold that thought for a second.

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